Credit risk modelling is an approach to determine the probability of default of a customer. Credit scoring is based on analysing customer’s personal information, transactional information, last premiums and payments made and many more variables and the outcome is a score reflecting the creditworthiness of the customer.
There are various credit scoring techniques which can be used for building collection scorecard, behavioural scorecard, application scorecard, cross-sell and upsell models, customer acquisition and retention strategies.